Key Points:

• 80% of electricity bills
  is not for electricity
• 75% of energy is wasted
  before leaving power plants
• Centralised power plants
  waste large amounts of water
• Energy can by supplied
  25% of current cost
• Decentralised energy is
  more economically efficient

Do you ever consider what components of your power bill add up to the rate that you’re paying? According to innovative British engineer Allan Jones, about 20% of the rate accounts for actual electricity. The majority of the rate is to pay for distribution, power loss and government grid fees. Jones recognised these financial and fuel inefficiencies and proposed a solution, local decentralised power, that managed to save a council 80% in energy costs and is now being implemented in London.

Jones planted the seed of decentralised power in 1990, when was a senior officer in council for the borough of Woking and submitted a report on global warming – long before it became an epidemic. The council moved very quickly and set up a revolving fund for the environment. The phenomenon started from there.

The primary cause of climate change is centralised energy. Centralised energy is energy generated by big power stations and delivered over long distances to many locations. Most centralised power plants use Coal as the fuel, which is about five times more polluting than gas. Most centralised power plants also waste two thirds of their energy as unused heat, in fact they waste large amounts of water to dissipate this heat. Considering a significant portion of consumer energy is spent on heating, the wasted heat seems rather unfortunate.

With such serious inefficiencies Allan Jones and the council of Woking recognised the opportunity to revolutionalise energy supply, the revolution of decentralised energy. Decentralised energy is a much more efficient of distribution electrical and heat energy through municipalities.

Decentralised energy is generated locally, that is, a small power plant is located close to or within the town or city it supplies. Both the electricity and heat are distributed – this is called ‘combined energy’. This way most of the energy is used, rather than most of it being wasted through heat dissipation. Much less electrical energy is lost through transmission because the distances are so short. Additionally, the heat that is usually wasted can be used to power heating inside buildings, hot water systems, and even refrigeration and cooling through a technology called ‘heat fired cooling’ – operations that usually require energy.

New infrastructure was required in order to generate and then deliver the electricity and heat, requiring a hefty amount of capital. However, the economic advantage of decentralised power made this easily feasible for Jones. £250 thousand was provided by the council Woking, a town with a population of 100,000. Jones had one condition, “Providing you allow me to recycle the financial savings from the energy bills, I won’t need any more money from you…”. Jones didn’t need any more money for the implementation.

The council of Woking saved about 1.2 billion a year on energy costs after the implementation of decentralised power while profiting from the joint venture energy services company established by Jones. Economically and environmentally Woking has done very well out of decentralised energy.

Jones believes that big energy companies can either interpret the current energy climate as a threat or as an opportunity. They can be large dinosaurs, refuse to change and become extinct or they can adapt by tackling climate change head-on. Centralised energy must be changed, Jones believes, since it is responsible for around 75% of emissions for some large cities.

Source: Allan Jones: getting off the grid – ABC Radio National’s “Saturday Extra”, 26 July 2008

The proposed framework for Australia’s solution to carbon emissions penalises the production of carbon emissions. Since most other countries are not implementing such schemes, this makes locally produced products more expensive. In reaction to higher domestic products, consumors will buy more imported products. Not only does this result in the collapse of Australian industries but also will not decrease carbon emissions – only shift them overseas where carbon emissions are not capped.

Internally carbon pricing consumed goods and services is a possible solution to this problem with many advantages. Charging the Australian consumer for the carbon emissions of the things they use can curb global carbon emissions while keeping economically competitive globaly. Carbon emissions are curbed because whether a product generating carbon emissions came from China, Fiji or Australia, more tax is charged for more carbon emissions – slowing demand and also funding environmental rehabilitation. On the other hand, Australia remains competitive because export prices remain on a level playing field, untaxed when sold offshore.

Keep in mind that the production model would allow Australia to import aluminium, steel and other energy-intense products from carbon-inefficient sources like China, no carbon prices would be passed onto the consumer. Although these producing countries are releasing the emissions, they are certainly not the only consumers. Wealthy western countries account for major exports from the highest emitting countries so shouldn’t they be penalised for the emissions their demand has produced?

This approach to solving global warming though carbon capping shares common disadvantages with the currently-accepted carbon production tax approach: A hit to Australians’ lifestyles. We might have to use more public transport or cycle more while being more conscious of lights and electrical appliances we’ve left on. Even if global warming isn’t real, sustainability is a great thing.

… from a radio interview with:

Geoff Carmody
Principal Geoff Carmody Associates Co-Founder Access Economics

Martijn Wilder
Baker & McKenzie

Entire Source: ABC Radio National Saturday Extra 2008-08-09 (30:00 – 45:00)
Snippet Mirror:  TimCinel.com [Saturday Extra 2008 08 09 - Consumer-Based Carbon Tax]